Sumalindo's profit drops due to tumbling demand

Sumalindo's profit drops due to tumbling demand

JAKARTA (JP): Decreasing demand and fierce competition from
Malaysian plywood producers have slashed the profit of PT
Sumalindo Lestari Jaya and prompted it earlier this year to
acquire the shares of a medium density fiberboard (MDF) firm.

Sumalindo's president, Winarto Oetomo, told reporters after an
annual stockholders meeting yesterday that the company's sales
revenue decreased by 11 percent to Rp 237.4 billion (US$106.4
million) in 1994, while its profit also dropped by 11 percent to
Rp 32 billion.

Out of last year's profit, 39.04 percent or Rp 12.5 billion
would go to shareholders as dividends -- at Rp 100 per share --
while the remaining Rp 19.5 billion would be used to expand the
company's activities.

Palgunadi Tatit Setyawan, a company director, explained that
Malaysia, which is a new comer on the world's plywood market and
currently has the advantage of tariff preference from the United
States, is a major plywood importer.

However, he was optimistic that Malaysia would soon reach the
point where it could no longer enjoy the privilege, giving way to
Indonesian exports again.

Winarto was also optimistic that the end of recession in major
importer countries would boost Indonesia's plywood exports again.

Sumalindo, a subsidiary of PT Astra International and PT
Barito Pacific Timber, currently exports 90 percent of its
products, mostly plywood. Its major importers include Japan, the
United States and European countries.

No figures on exports were available yesterday from Sumalindo.
Earlier reports show, however, that Indonesia's plywood export
prices dropped from an average of $474 per cubic meter in 1993 to
$457 in 1994 and to $390 at present. The country's revenues from
plywood exports also dropped by nearly 12 percent from $4.22
billion in 1993 to $3.72 billion last year.

MDF

Winarto asserted that Sumalindo, which produced only 205,000
cubic meters of plywood last year from its installed capacity of
250,000 cubic meters, would not rely solely on plywood as a major
income earner.

"In the future, part of the plywood market will be taken over
by the MDF industry and plywood will become a luxury good," he
said, adding that both materials had advantages of their own and
in many cases one could not replace the other.

Sumalindo, he said, would continue to expand its activities to
the medium density fiberboard industry, while continuing to
maintain its present share in the plywood market.

Sumalindo, therefore, signed an agreement in January to
acquire a 75 percent stake of PT Nityasa Mandiri, a medium
density fiberboard company at Rp 26.25 billion, he said.

Nityasa Mandiri is currently building three medium density
fiberboard plants, the first of which is expected to start
operation early next year, he added.(pwn)